Flats 50 and 70 Park View Court, Bath Street, Nottingham, NG1 1DE BIR/00FY/LSC/2023/0005
FIRST-TIER TRIBUNAL
PROPERTY CHAMBER (RESIDENTIAL PROPERTY)
Case No BIR/00FY/LSC/2023/0005
Between
Mr Peter EvansApplicantPark View Court Residents Community RTM Co LtdRespondent
Before
Judge C GoodallMr G Freckelton FRICSMs K BentleyBlue Property Management UK Ltd (Mr Ian Fahy) for the ApplicantManagement Legal Services Ltd S27A Landlord and Tenant Act 1985 (1) for the RespondentDate 23 July 2025Property: Street, Nottingham, NG1 1DE
DECISION
[1]By an application dated 22 March 2023, the Applicant applied for a determination of the payability of service charges on flats 50 and 70 at Park View Court (“the Court”) for service charge years 2018, 2019, 2020, 2021, 2022, and 2023. The challenge to 2023, in the light of the date of the application, is to the proposed budget expenditure in that year.[2]The Respondent is a right to manage company which acquired the right to manage the Court in around September 2012. They have engaged professional property managers to manage the Court for the years in dispute, those managers being Marriotts of Nottingham. Marriotts was acquired by Barnsdales on 1 January 2020, so since then the management has been under the name of Barnsdales. They ceased management in around July 2024.[3]The hearing took place at Nottingham Magistrates Court on 6 & 7 January 2025. The Applicant did not attend but he was represented by Mr Ian Fahy of Blue Property Management UK Ltd, which is a property management company of which the Applicant is a director and a person with significant control. The Respondent was represented by Ms Cassandra Zanelli, Solicitor, from Property Management Legal Services Ltd. The Tribunal heard from one witness, a Rebecca O’Neill, a director of Barnsdales.[4]For the hearing, a bundle of documents (“the Bundle”) had been provided running to 2,078 pages. Subsequent to the hearing, the following additional written submissions have been provided to which the Tribunal has given careful consideration:a. A written submission on 7 January 2025 from the Respondent relating to the claim by the Applicant that the accounts did not reflect the actual costs incurred as evidenced in the invoices for each year under challenge. That submission was accompanied with copies of the nominal ledgers for each year;b. A written response to this submission from the Applicant dated 27 February 2025;c. An undated written reply to the Applicant’s response from the Respondent, both b and c being directed by Directions from the Tribunal dated 8 January 2025;d. A second witness statement from Ms Rebecca O’Neill dated 3 March 2025;e. Written closing submissions from both parties, received in June 2025. Law on service charges[5]Sections 18 to 30 of the Landlord & Tenant Act 1985 (“the Act”) contain statutory provisions relating to recovery of service charges in residential leases. Normally, payment of these charges is governed by the terms of the lease – i.e. the contract that has been entered into by the parties. The Act contains additional measures which generally give tenants additional protection in this specific landlord/tenant relationship.[6]Under Section 27A of the Act, the Tribunal has jurisdiction to decide whether a service charge is or would be payable and if it is or would be, the Tribunal may also decide:-a. The person by whom it is or would be payableb. The person to whom it is or would be payablec. The amount, which is or would be payabled. The date at or by which it is or would be payable; ande. The manner in which it is or would be payable[7]Section 19(1) of the Act provides that: “Relevant costs shall be taken into account in determining the amount of the service charge payable for a period –(a) Only to the extent that they are reasonably incurred, and(b) Where they are incurred on the provision of services and the carrying out of works, only if the services or works are of a reasonable standard: and the amount payable shall be limited accordingly.”[8]Section 19(2) of the Act provides that: “Where a service charge is payable before the relevant costs are incurred, no greater amount than is reasonable is so payable, and after the relevant costs have been incurred any necessary adjustment shall be made by repayment, reduction or subsequent charges or otherwise.”[9]The construction of the lease is a matter of law, whilst the reasonableness of the service charge is a matter of fact. On the question of burden of proof, there is no presumption either way in deciding the reasonableness of a service charge. If the tenant gives evidence establishing a prima facie case for a challenge, then it will be for the landlord to meet those allegations and ultimately the court will reach its decisions on the strength of the arguments. Essentially the Tribunal will decide reasonableness on the evidence presented to it (Yorkbrook Investments Ltd v Batten [1985] 2EGLR100 / Daejan Investments Ltd v Benson [2011] EWCA Civ 38).[10]When interpreting a written contract, the Tribunal has to identify the parties' intention by reference to what a reasonable person having all the relevant background knowledge would understand the terms to mean. We have to focus on the meaning of the words in their context and in the light of the natural meaning of the clause; any other relevant provisions; the overall purpose of the clause and the lease; the facts and circumstances known by the parties at the time; and commercial common sense (Arnold v Britton [2015] UKSC 36).[11]In relation to the test of establishing whether a cost was reasonably incurred, in Forcelux v Sweetman [2001] 2 EGLR 173, the Lands Tribunal (as it then was) (Mr P R Francis) FRICS said: “39. …The question I have to answer is not whether the expenditure for any particular service charge item was necessarily the cheapest available, but whether the charge that was made was reasonably incurred.[40]But to answer that question, there are, in my judgement, two distinctly separate matters I have to consider. Firstly, the evidence, and from that whether the landlord’s actions were appropriate, and properly effected in accordance with the requirements of the lease, the RICS Code and the 1985 Act. Second, whether the amount charged was reasonable in the light of that evidence. The second point is particularly important as, if that did not have to be considered, it would be open to any landlord to plead justification for any particular figure, on the grounds that the steps it took justified the expense, without properly testing the market.”[12]In Veena v Cheong [2003] 1 EGLR 175, the Lands Tribunal (Mr P H Clarke FRICS) said: “103. …The question is not solely whether costs are ‘reasonable’ but whether they were ‘reasonably incurred’, that is to say whether the action taken in incurring the costs and the amount of those costs were both reasonable.”[13]In Schilling v Canary Riverside (unreported 2005 LRX/26/2005 Lands Tribunal – see paragraph 32-35 of Service Charges and Management 5th edition) Judge Rich observed (inter alia):a. the fiduciary duty of landlords to account for any service charge which they collect, and their statutory duties under Landlord and Tenant Act 1985 ss.21 and 22, mean that it is sufficient for tenants to raise the absence of a proper account in order to place upon landlords an evidential burden to satisfy a tribunal that costs have, in fact been incurred;b. if landlords are seeking a declaration that a service charge is payable, they must show not only that the cost was incurred but also that it was reasonably incurred in the provision of services or works of a reasonable standard under Landlord and Tenant Act 1985 s.19.[14]In The London Borough of Hounslow v Waaler [2017] EWCA Civ 45, the Court of Appeal was considering whether the cost of replacing windows by Hounslow was reasonable where there was also an option of repair. The repair option (replacement of hinges) was substantially less than the cost of replacing the windows. The Court said that in applying the statutory test under section 19 to Hounslow’s decision, it was necessary to go further than just consider whether the decision-making process was reasonable; the outcome of that process also needed to be considered (paragraph 37) as did the legal and factual context (at least in consideration of expenditure on improvements) (paragraph 42).[15]If a tenant wishes to allege that a cost was not reasonably incurred so that the related service charge is not payable, it is well-established that the tenant must make a “prima facie case” that the cost was not reasonably incurred; in other words, he or she must produce some reason or evidence that indicates that the cost was not reasonable. The tenant cannot simply put the landlord to proof that it was reasonable. That prima facie case might be, and often is, a cheaper quote for the same work or service; but it might be an observation that certain events or circumstances make the cost look unreasonable (paragraphs 3 & 4 of Okoye v Gray’s Inn Capital Limited [2025] UKUT 195 (LC)). Inspection[16]The Tribunal inspected the Court on the afternoon of 7 January 2025.[17]The Court is a 19th century brick built Grade II listed building comprising of 80 flats. These are laid out in a C shaped building with four central cores, each core having four flats on each of five storeys. There is lift and stairwell access to each core with open corridors and stairwells. The walls of the stairwells and corridors are half-height (so open to the elements), and brick lined, and the floors are in concrete.[18]Notwithstanding its listed status, the Court is not an attractive building; the lighting in the communal areas during our visit was poor; the ambience feels somewhat oppressive. The open corridors are obviously unheated and not fully protected from rain.[19]At the front of the Court is a lawned area with a tree and surrounding shrubs. At the rear is an area for parking. We understand there are 50 spaces, to be used on a first come first served basis. No lessee, we have been told, has a car parking space demised in their lease. The car parking area is cramped and on the day of our inspection, was over-used. The Applicant’s case[20]The application form did not raise specific challenges to the service charges levied on the Applicant. It explained that the Applicant was not able to assess whether the service charges levied were correct due to absence of documents, and it sought specific disclosure of invoices and other documents for all years challenged.[21]In its statement of case dated 23 February 2024, the Applicant set out, with a certain amount of vagueness, its more general challenges. These were:a. The Respondent has not complied with its obligations to maintain, repair and decorate;b. Such work as has been carried out has been of a poor standard;c. The insurance costs are too high, and have risen exponentially;d. Proper books of account have not been kept;[22]Complaints were made that, although some invoices had been disclosed by the time of the preparation of the Applicant’s statement of case, they were inadequate, and in particular quotes relating to a statutory consultation on major works in 2022 had not been fully disclosed. Further disclosure was requested.[23]As is usual in service charge disputes, the Bundle included other documents upon which the parties relied in support of their cases. At p520, an email dated 1 July 2024 from the Applicant and written following additional disclosure from the Respondent received on 15 and 19 May 2024, was provided in which the Applicant claimed that there were numerous anomalies between the service charge accounts and the invoices disclosed. In particular, there was a shortfall between the accounts figures and the invoice totals of: £ 2019 14,562.08 2020 24,668.76 2021 9,933.79 2022 5,683.53[24]The service charge year 2018 is not listed because no invoices have been provided for that year. The Applicant says that accordingly no service charges should be found to have been reasonably incurred in 2018.[25]By the time of the hearing, the parties had co-operated to the extent that a Scott Schedule of specific challenges to some of the invoiced charges included within the accounts had been prepared and included in the Bundle.[26]At the hearing, Mr Fahy was able to confirm that the Applicant’s challenges had been refined to four key areas, being:a. The challenges to any service charges for 2018 on the grounds that the invoices are missing, and the challenges to 2019 – 2022 as challenged in the Scott Schedule on the basis that they had been unreasonably incurred;b. The challenge to the inclusion in the service charge accounts of charges for which no invoices had been produced;c. A challenge to the consultation process for major works that started with the service of a Notice of Intention dated 6 December 2021 in relation to installation of a communal fire detection system, cladding and re-roofing of lift shafts, and re-covering of the main roofs. That challenge, foreshadowed in paragraphs 11-13 of the Applicant’s statement of case, was to whether the statutory notices had been properly served;d. A challenge relating to whether the service charge demands sent to the Applicant complied with section 21B of the Landlord and Tenant Act 1985.[27]In his closing submissions, Mr Fahy also suggests that the s20 consultation documentation shows a failure to comply with paragraph 11(5) of Schedule 4 to the Service Charges (Consultation etc) Regulations 2003, in that the documents show that two estimates were not obtained for the works. This point is dealt with separately in the discussion below. The Respondent’s case[28]Limiting the content of this section to the Respondent’s direct answer to the issues identified by the Applicant:a. On the direct challenges to individual invoices as set out in the Scott Schedule, the Respondent does not accept that any of the invoices challenged were unreasonably incurred, relying on the evidence of Ms O’Neill and its responses in the Scott Schedule;b. The Respondent does not accept that there are any anomalies in the accounting records. It does not argue that the invoices supplied exactly match the accounts produced. Rather its case is that the Applicant has failed to understand that accounting on an accruals basis means that there will be accruals and pre-payments brought into the accounts that are not reflected in the invoice totals within one service charge year;c. On compliance with section 20 in relation to the major works consultation in 2021/22, the Respondent’s case is that the notices were served fully in compliance with the law and if they were not actually received, they are nevertheless deemed to have been served. The Respondent denies that there is any failure in the consultation process which could result in the cost of the works being limited to the statutory maximum permitted if no consultation (or dispensation) is granted;d. On the service of section 21B compliant service charge demands, the Respondent’s position is that the demands were compliant, but that in any event a failure to comply with section 21B has a suspensory effect only on the recoverability of the sums demanded, and the Respondents legal team has re-served fully compliant demands. The Leases[29]Neither party raised any issue regarding the terms of the leases under which the Applicant holds his flats. The Tribunal was provided with a copy of both leases. Both are tri-partite leases (i.e. in addition to the landlord and the tenant, a management company was a party to the leases with responsibility to manage them) for a term of 199 years, commencing in 1990, let at a premium with an annual rent of £50.00.[30]The management company covenants to maintain and manage the Court in the terms of the Fifth Schedule, and the lessee covenants to pay a percentage contribution of those costs by way of service charge. The percentage for flat 50 is 1.879%, and for flat 70 it is 1.1278% (though the leases contain provision for variation of these percentages). Those management duties have now been taken over by the Respondent.[31]The service charge year is 25 December to 24 December in the following year. An estimate of the service charges for each year is to be made and the lessees are to pay one half of that estimate on each of 24 June and 25 December in each year. When accounts for the year are made up, the lessees are to pay any shortfall balance shown due within 21 days, or to receive a repayment or a credit if there is an excess. Individual service charge demands[32]Apart from raising the question of whether service charge demands comply with section 21B of the Act, we have not been asked in this case to calculate the actual individual service charges payable by the Applicant in each year for which challenges are made. Rather, the Applicant has urged on us that if we find in his favour, we should find that the total amounts charged to all service payers in each year should be determined, leaving the parties then to calculate the impact upon the Applicants own personal service charge bills. We will adopt this approach. Discussion[33]It is now appropriate to consider in more detail the Applicant’s challenges and other issues that require comment. The service charge year[34]The Respondent appears historically to have prepared accounts on the basis of a service charge year running from 1 Jan to 31 Dec in each year. This case has however caused the Respondent to review the leases, and it has realised that the service charge year should run from 25 Dec to the following 24 December. The accounts have accordingly been redrawn.[35]This change has not had a material impact upon our decision as the main basis upon which the Applicant has presented his case is to challenge individual invoices. There appear to be no disputed invoices arising in the period 25 Dec – 31 Dec in each year, so for all material purposes, in this decision the Tribunal has regarded the service charge year as being the historically used calendar year. The 2018 service charge year[36]The Respondent’s manager for the 2018 service charge year was Marriotts. Ms O’Neill was the Respondent’s witness. She is a qualified property manager and a director of Barnsdales. That business took over management of the Court on 1 January 2020.[37]In its statement of case, the Respondent explained that supporting invoices for 2018 could not be found, despite a thorough search. However, the former accountant who prepared accounts for that year had been able to produce a ledger which set out the composition of the expenditure, from which the accountants prepared the accounts.[38]That ledger lists the nominal ledgers one would expect to see for keeping accounts for a property management business, such as repairs, insurance, utility costs, management fees, water rates, cleaning, fire safety etc. It is a printed document with red scribbled markings entirely consistent with having been marked up by an auditor. There is no basis upon which we could find anything other than that the ledger is a genuine ledger recording actual expenditure on the Court for 2018.[39]The total expenditure on the ledger is £91,945.32. Accounts for 2018 were produced which showed expenditure of £89,352.40. An additional sum of £4,000.00 was then added as a contribution towards a sinking fund. So, the service charge collected for 2018 would appear in fact to be potentially less than the amount evidenced as being spent.[40]We cannot agree with the Applicant that we should find that no service charge is payable for 2018 as no invoices exist. It is entirely apparent that expenditure was incurred, and the ledger for 2018 supports the amounts set out in the accounts for that year.[41]We determine that the service charges originally demanded from the Applicant for 2018 are payable. The 2023 service charge year[42]The application form asked the Tribunal to reach a determination on the payability of service charges for 2023 based on a budget produced for that year. The Bundle did not contain any accounts or ledgers for the actual expenditure in that year. A budget was provided, showing budgeted expenditure of £127,760.00. Invoices for the year were provided also, and objections to those invoices were recorded in the Scott Schedule.[43]All of the budgeted expenditure in the budget appears to the Tribunal to be reasonable. Of course, if the Applicant wishes to challenge his service charges for that year when the accounts have been produced, and based upon the actual expenditure, he has a right to do so.[44]We have not reviewed the Scott Schedule objections to the 2023 invoices. Our jurisdiction is to review the payability of service charges demanded under a lease. Until final accounts have been produced, the Applicant will not know what sum is demanded from him for 2023. Challenges to the actual invoices are therefore premature. The invoices listed on the Scott Schedule – 2019 – 2022 inclusive[45]After preliminaries, the hearing on 6 January 2025 commenced with consideration of the Scott Schedule, through Mr Fahy having the opportunity to cross-examine Ms O’Neill in relation to each challenge.[46]As there were around 583 individual challenges in a Scott Schedule of 89 pages, which would have taken an excessive time to consider line by line, on the second hearing day the process was changed to consideration of the category of expenditure for each invoice challenged by Mr Fahy across the range of the years in dispute. Mr Fahy was asked to identify the categories of greatest significance to the Applicant. In this way, the categories on which we therefore heard oral evidence with cross-examination on day 2 were:a. Parking permits (approx. 39 challenges)b. Internal cleaning costs (approx. 45 challenges)c. External cleaning costs (approx. 10 challenges)d. Emergency lighting and testing (1 challenge)e. Lift maintenance (approx. 28 challenges)f. Water bills (approx. 34 challenges)g. Insurance costs (approx. 8 challenges)h. Management fees (approx. 16 challenges)i. Gardening (approx. 43 challenges)[47]We consider each:a. Parking permits i. The Applicant challenged the inclusion in the service charge accounts of the cost of issuing parking permits, invoices for which had been disclosed to the Applicant. Each invoice was for £2.40. ii. The Respondent’s explanation was that the parking permit costs are re-charged to owners, and do not form part of the service charge expenditure. To explain, the Respondent provides all lessees with(1) annual permit and(2) annual visitors permit. In the event lessees seek additional permits (for example, if their issued permit has been lost) an additional permit is issued but at cost to the lessee. The cost is charged by parking control to the Respondent, who then passes on those costs to the lessee. The service charge fund is not utilised for such additional permits. iii. The Applicant’s concern with this explanation was that the invoices for replacement permits were addressed to the management company rather than the individual lessees, so it was not clear that the individual lessees were recharged. iv. We asked for further details of the arrangement for recharges. In her second witness statement, Ms O’Neill confirmed that the contract for managing the parking arrangements is between the service provider and the Respondent, so the cost of replacement permits were properly invoiced to the Respondent, but she also confirmed that those costs were recharged to the lessees. v. Unfortunately, the Respondent could not supply copies of all the recharging invoices. For the period during which Marriotts were managers, Ms O’Neill inspected some Marriotts bank statements and noted a small number of receipts for small sums of around £3.00 which would be consistent with their declared practice. vi. For years in which the accounts were prepared by Morton Baxter (2021 & 2022), the Respondent’s solicitors contacted that firm, which was able to provide a copy of a portion of their expenditure analysis document which recorded the sums recharged for parking permits, and some copies of invoices to four lessees for parking permits. vii. Although the paper trail is not perfect, on the balance of probabilities, we find that the Respondent did provide parking permits to lessees without charge to the service charge account and did recharge additional parking permits to the individual lessees. Therefore, we find that there is no basis for determining there are any costs for parking permits in the service charges which have been unreasonably incurred.b. Internal cleaning costs i. The Applicant’s challenge is to the hourly cost of cleaning across all service charge years under challenge. ii. The invoices show that in 2019 – July 2022, cleaning was carried out by Sterling Contract Services Ltd (“SCS”). There was then a contractor change to The Old Maids. A further contractor change, to Deitmers occurred in July 2023, but we are not considering 2023 actual expenditure. iii. In 2019, SCS charged £64.50 plus VAT per clean of the internal communal areas, being entrance halls, staircases, lifts, and corridors, undertaken by two operatives (according to the Respondent). Windows were also cleaned at a separate charge of £18.00 plus VAT for each clean. iv. SCS carried out cleaning each fortnight and would typically invoice for two cleans on a monthly basis. Each invoice was therefore for 2 x £64.50 + £18.00 (£165.00) plus VAT (£33.00) = £198.00. v. In December 2021, the invoiced amount changed (page 1144 of the Bundle). The services expanded to include litter picking and unclogging drains, and the cost increased from £82.50 per visit to £99.00 per visit. So rather than the monthly invoices being for £165.00 plus VAT, they increased to £198.00 plus VAT. vi. Regrettably, the Respondent appears not to have picked up this change in its responses to the Scott Schedule. In line 498 on page 590, it still asserts that the weekly clean cost £64.50, whereas the invoice being referred to in that line clearly charges significantly more. No explanation has been provided for the increase. vii. The final invoice from SCS for the monthly sum of £237.60 was submitted in July 2022. The August charge for cleaning was from a different contractor, being “The Old Maids”. The invoices listed their cleaning duties as: “Clean skirting boards, stair boards, common internal doors & frames, windowsills, clean banister rails, keep bin areas and grounds free of light rubbish. Hoover all carpets & mop where required. Keep cupboards under stairs free of light rubbish. Report any faults. Clean internal windows 1st visit of each month where reachable.” viii. The Old Maids carried out a clean weekly rather than fortnightly. They did not charge VAT. This firm continued to invoice for cleaning until March 2023. There appear to have been no cleaning invoices for April and May, and a new contractor called Vivienne Deitmers then invoiced for July. That firm also charged £100.00 per clean with no VAT. ix. In her written witness statement, Ms O’Neill dealt with the cleaning costs challenge only briefly and with over-generalised comments. No detail of the changes of contractor and the reasons for them were given. However, Ms O’Neill did explain that the manager used a cleaning specification, and choice of contractor was by closed tender, in consultation with the directors of the Respondent. x. At the hearing, Ms O’Neill told us that there had been a re-tendering of the cleaning contract in July 2022 at which point The Old Maids had been appointed. However, the directors became unhappy with the service provided by that firm and so switched again to Deitmers, as the invoices show. xi. Ms O’Neill’s evidence was that in her view the cleaning contractor was selected by a competitive tender process, and that the charges are reasonable. xii. Our task is to assess whether the cleaning costs charged in the invoices referred to above were reasonably incurred. The Applicant’s challenge is simple. His case is that a clean would have taken no more than 4 hours and a reasonable rate per hour would be £15.00 per hour. xiii. The Tribunal’s view is that the Court is highly challenging to clean. It is a large, old, Victorian building, and though the communal access corridors can be described as internal, in truth they are open to the weather and somewhat inhospitable in winter. We have noted that occasionally the cleaning invoices add an additional charge for clearing human faeces and condoms and needles. This gives a sense of the challenge. xiv. We do not agree that £15.00 per hour would be a reasonable charge rate. Allowance has to be made for employee on costs of national insurance, pension, administration costs, profit, and the addition of VAT if the contractor is registered. Our view is that the rate of £64.50 plus VAT per clean and £18.00 plus VAT per hour for windows is entirely reasonable. We note that no quote for comparison purposes was provided by the Applicant. xv. The cleaning costs for the years under challenge were, in our view, reasonably incurred.c. External cleaning costs i. The Respondent engages a groundsman to carry out external cleaning duties (e.g. litter picking, cleaning of gulleys, and a general sweep) in addition to a contractor to carry out internal cleaning, by the name of Robert Pegg. Mr Pegg charges £5 per day and carries out his duties around 3 times a week. All his invoices were for services in 2019. ii. The Applicant says these services should have been provided by the contractor for internal cleaning. iii. The Respondent points out that the internal cleaning contract does not include external cleaning. iv. We find that the costs of this service were reasonably incurred. We note that no quote for comparison purposes was provided by the Applicant. The Respondent has a duty to keep the Court clean. The use of a groundsman at minimal cost cannot reasonably be criticised.d. Emergency lighting and testing i. The Applicant has made a specific challenge to expenditure to pay an invoice for £768.00 (£640.00 plus VAT) dated 24 February 2029 from Intelligent Electrical Ltd for installation of new led emergency lights on wall areas of escape routes and installation of new led bulkheads to replace old lights that have failed. ii. The challenge is: “No labour or materials breakdown, as required by the RICS code (10.4 Monitoring). A reasonable amount is £10 per light and labour at £15 per hour. contractor has no visible qualification. Without knowing this detail nothing can reasonably be charged. Installation of LED lights are £20.00, see page 48. See link:[link given].” iii. The Respondent’s response in the Scott Schedule is: “In addition to the reactive repairs to the emergency lighting and/or internal and external lighting, this head of expenditure includes the regular testing of the lighting which is undertaken on a monthly, 6-monthly and annual basis. The Respondent, as Responsible Person under the Regulatory Reform (Fire Safety) Order 2005 has duties which include (1) duty to take general fire safety precautions (article 9), and (2) duty to safeguard emergency routes and exits including providing emergency lighting (article 14). The installation of the emergency lights on walls of escape routes is demonstrative of the Respondent discharging its duties under the FSO. Such costs are reasonably incurred and reasonable in amount.” iv. In oral evidence, Ms O’Neill informed us that works were required to 16 corridors (internal, but open to the elements) and 8 bulkheads, involving 32 lights. The emergency evacuation procedure for the Court is simultaneous evacuation meaning the corridors required reliable emergency lighting. v. We find that this invoice was reasonably incurred. From what we have already said above, readers will understand that the Tribunal found the Court to be a highly challenging building. No responsible manager should take any risks with building safety. It is wholly reasonable for the Respondent to improve / upgrade / maintain the emergency lighting system in the Court.e. Lift maintenance i. The Applicant’s challenge was to the hourly rates charged in invoices from MG Lift Services Ltd for lift maintenance for 2020, 2021, and 2022 (lines 406 – 410, 554 – 559, and 1026 - 1031 in the Scott Schedule), and to the practice of summoning engineers out of weekday hours, as weekend rates were more expensive. ii. The Respondent’s general response in the Scott Schedule was: “These are reactive repairs undertaken to the (old) lifts within each of the 4 blocks. MG Lift Services is a contractor well known to the Respondent, with an invaluable historic knowledge in relation to the lifts. The contractor has specific expertise in relation to the lifts, which require specific parts the contractor is able to source.” iii. The hourly rate charged for repair visits ranged from £43.00 per hour in 2020 for working hours visits (with a marginal rise each following year) to £69.00 per hour for out of hours visits in 2022. iv. The Respondent claimed that the hourly rates were reasonable rates throughout. In her oral evidence, Ms O’Neill said MG Lift Services Ltd charged less than Otis or Schindler, in her experience, and all contractors would charge an enhanced rate for out of hours call outs. She explained that the directors of the Respondent company had direct access to the lift contractor and would summon assistance themselves if any of the lifts was out of order in accordance with residents demands. v. The Tribunal note that the Applicant has not produced any comparable quotes for lift maintenance. The Respondent does not have to contract in any event with the cheapest contractor; questions of familiarity with the lifts and reliability of the contractor are also relevant considerations. vi. For the reasons given by the Respondent, the Tribunal accepts that engagement of MG Lift Services Ltd was a reasonable management decision and there is no evidence before us that their charge out rates are unreasonable. vii. The answer to the question of whether there was excessive or unnecessary use of lift engineers out of hours, is that lift engineers appear to have been summoned by the directors of the Respondent in response to on-site demand from residents. Our view is that this is a reasonable practice, and we do not consider the out of hours invoices to have been unreasonably incurred. viii. We find that the lift maintenance charges challenged by the Applicant were reasonably incurred.f. Water bills i. Water rates bills are for both the communal supply of water and the 80 residential flats at the Court. ii. In 2019, invoices for water charges listed in the Scott Schedule from Severn Trent Water totalled £11,754.08. The accounts charge for that year for water was £14,364.97. iii. In 2020, the figures were – invoice totals, £6,150.03: accounts charge £4,687.03. These charges are not challenged by the Applicant. iv. In 2021, no invoices for water charges are listed in the Scott Schedule, but invoices from Severn Trent Water appear in the Bundle and total £9,723.37. The accounts charge is £6,205.00. These charges are not challenged by the Applicant. v. For 2022, the invoices listed in the Scott Schedule total £20,407.72. The accounts charge is £23,377.00. vi. The Applicant has challenged the 2019 and 2022 charges on the grounds that: “Unreasonable. There must be a water leak. There was communication about a leak to the tenants some time ago. 2020 expenditure is reasonable at approximately £,6,000.” vii. The Respondent’s answer in the Scott Schedule is: “The costs relate to the supply of water to the flats within Park View Court. Whilst it is acknowledged by the Respondent that there have been water leaks at the development, such leaks have been investigated in a timely fashion and necessary repairs undertaken to address the leaks. Such costs are, therefore, reasonably incurred and reasonable in amount.” viii. In her witness statement, Ms O’Neill provided no evidence to explain the discrepancy between the amounts charged in different years, nor did she comment on the allegation that there must have been a leak. ix. At the hearing, Ms O’Neill explained that she had no personal knowledge of the position in 2019, when the Court was being managed by Marriotts. She was aware of the position in 2022. She told the Tribunal that one possible explanation for excessive water charges was the possible unauthorised use of an external tap. In 2022, Barnsdales had had to arrange for the eternal tap to be locked because of the concern about excessive use. x. She also said that in 2022 Barnsdales had contested the water charges with Severn Trent. She said they had investigated and found no trace of water leakage. The Applicant’s representative put it to her that further investigations should have been carried out. Ms O’Neill said that there was no effective choice of water supplier, and her view was that the Respondent had no option but to pay the bills received. xi. The Tribunal fully understands why the Applicant has challenged these charges. There are a number of discrepancies between the invoices and the accounts (some of which favour the service charge payers), and the charges in 2019 and 2022 appear out of kilter with those for the intervening years. xii. However, we are not able to conclude that the payments were unreasonably incurred, because the managing agent appears to have investigated problems and taken reasonable actions in response. We are not sure what further actions they might have taken that could have resulted in a reduction of these charges. We determine that the water charges were reasonably incurred.g. Insurance costs i. Ms O’Neill answered questions from Mr Fahy on why there was so much fluctuation between the insurance charge in 2019 of around £15,000.00, rising to £26,000.00 in 2020, and then falling to £11,000.00 in 2021 (in fact rather less that that). The answer given was that that is the way the insurance market works, and the insurance is tendered annually. ii. In fact, Ms O’Neill told us, in 2020 there had been a number of insurance claims that affected the premium, and a reinstatement cost assessment was carried out that resulted in a reduction of premium and the issue of a credit note in 2022. iii. When the Tribunal considered insurance costs in connection with the Applicant’s second issue regarding missing invoices (starting at paragraph 48 below), we looked at the insurance documentation in detail, reviewing the policy documents and invoices provided and we made findings of fact and determinations about insurance that appear in paragraphs 63 j – m, and 64 c - h below, to which readers are referred.h. Management feesi. In the Scott Schedule, the Applicant’s challenge to management fees was to those charged in 2020 and 2021. The charge was £17,750.00 for those years. The Applicant suggested that the quality of management was poor and could not justify those fees. An appropriate management fee would be £75.00 per flat, i.e. £6,000.00. ii. The Respondent denied that the service levels were poor and said the level of service had not fallen below a reasonable standard. The fee equated to £215.62 per flat. The invoices for the fee did not include VAT. iii. In the Tribunal’s view this level of fee is a reasonable market rate for management of a difficult property. We find that it was reasonably incurred. iv. The Applicant had also raised the possibility that the management fee should be limited due to lack of consultation, as it might have been payable under a qualifying long term agreement on which there had been no consultation, though the Applicant did not provide any evidence that such an agreement had been entered into. v. Ms O’Neill evidence was that all Barnsdales management agreements were in ARMA Model Agreement Form, which provides for 364 day contracts, so that they never qualify as long term agreements. The Tribunal accepts that evidence. i. Gardening i. Invoices for garden maintenance charges for 2019, 2020, 2021, and 2022 from a company called Marvellous Gardens, or (later) Marvellous Spaces are challenged by the Applicant. Throughout the period of challenge, the gardening company have charged the sum of £280.00 per gardening visit. There were nine visits in each of 2019 and 2020, and 11 visits in each of 2021 and 2022. The invoices do not indicate frequency of visits within the month invoiced. ii. The challenge is: “No details of work, labour, materials etc. Small piece of grass in front of building. Maximum 2 hours at £15 per hour.” iii. The Respondent’s response is: “The grounds at Park View Court comprise hard and soft landscaped areas, including a number of trees, bushes, shrubs and other planting. Park View Court is Grade II listed and in a conservation area. The costs cover tasks including (1) sweep up of garden waste from hard scaped areas (2) general gardening(3) cutting of grass(4) planting of flowers etc. The front garden is not a "small piece of grass" as the Applicant suggests, but is approx. 304 sq. m. In addition, the car park area is located to the rear of the development. The car park and access road (which has car parking spaces) is approx. 957 sq. m. The landscaping costs are reasonably incurred and reasonable in amount.” iv. The Tribunal agrees that the area requiring to be kept in good order is of the size suggested by the Respondent. v. In her oral evidence, Ms O’Neill told the Tribunal that there is a specification for the gardening work, which required: edge the lawns, remove debris, weed (including removal of weed seedlings), apply weedkiller where needed, tidy, prune and cut hedges, cut grassed area with roller mower, remove trimmings, machine blow hard surfaces to remove leaves etc. vi. Ms O’Neill said that Marvellous Gardens attended on in the region of 24 visits per year. She considered their service to be good; there were hardly any complaints about them. vii. Barnsdales put the garden contract out to tender in 2023. Two other contractors tendered, one of whom proposed a fee of £230.00 pcm, and the other a fee of £282.00 pcm. In the end, the directors of the Respondent decided to retain the services of Marvellous Spaces as though there was a cheaper option, the directors valued the relationship they had developed with that company and considered that they provided a good service. viii. The Tribunal has noted that the Applicant has not provided a competitive quotation for the garden work. We accept Ms O’Neill’s evidence that the contract is good value for money and remind ourselves that a reasonable contract fee does not have to be the cheapest fee available. We find the gardening charges challenged in the Scott Schedule for 2019 – 2022 to have been reasonably incurred.j. Miscellaneous i. During the first hearing day, we heard evidence on challenges to certain invoices as we were going through the Scott Schedule line by line, rather than by category. The Applicant challenged an invoice dated 6 February 2019 for replacement of a faulty handset for the intercom system at a cost of £72.00 (line 70). Ms O’Neill explained that the intercom system was very old, and it was difficult to source parts. This handset was faulty and needed to be replaced, but the longer term solution was to replace the intercom system with a wireless system, which was ultimately carried out. We find this expense to have been reasonably incurred. ii. A further challenge (line 71) was to an invoice for emergency light testing and replacement of light fittings and installation of new flood lights, at a cost of £288.00. The challenge was that no charge could be levied unless the invoice provided adequate detail of the work undertaken. iii. We reject this challenge. As the Respondent argued, there is no obligation for a management company to ensure every invoice has a detailed narrative describing the work undertaken, and the absence of such a narrative is not prima facie evidence that the invoice has been unreasonably incurred. The Applicant provided no reason for this invoice to be held to unreasonably incurred. We determine that it was reasonably incurred. iv. Following this principle, we reject all of the Applicant’s challenges to invoices based on an argument that they are not reasonably incurred due to insufficient detail appearing on the face of the invoice. v. It will be apparent that in this decision the Tribunal has not reached individual determinations on every single challenge set out in the Scott Schedule. During our deliberations, however, we did review each line of the Scott Schedule. Our decision is that of all the challenges not otherwise dealt with in this decision, the Tribunal was unable to find any basis for upholding those challenges, due either to the Applicant’s failure to establish a prima facie basis for challenge, or our view that the Respondent’s response was adequate to persuade us that the invoices were reasonably incurred. No invoices for sums charged to service charge[48]The Applicant’s position on this issue arises because of what the Applicant says is the failure of the Respondent to provide the invoices to support all of the expenditure charged to service charge payers as set out in the annual service charge accounts.[49]To support the service charge amounts, the Respondent also provided the Applicant and the Tribunal with copies of the nominal ledgers recording expenditure for each year. The Tribunal would not expect the ledgers to match the accounts pound for pound because of the need to adjust the accounts for accruals and pre-payments, but they do provide another source for recording expenditure and are thus of value to the Tribunal.[50]The evidence before the Tribunal of the respective amounts for 2019 – 2022 is: Invoices (£) Accounts (£) 2019 69,100.67 83,662.75 2020 61,954.81 86,623.57 2021 65,215.21 75,149.00 2022 116,213.47 121,852.00[51]In his submissions prepared to support this element of the Applicant’s challenge dated 27 February 2025, and prepared by Aliz Molnar, Head of Accounting for the Applicant’s representative, certain categories of expenditure in each accounting year are set out. Ms Molnar then identifies specific expenditure set out in the accounts but not supported by invoices in the disclosed invoices and seeks a determination that the expenditure is ”invalid”. The challenges are shown in the table below.[52]In the table, the second column shows the Applicant’s interpretation of the position shown in the accounts against the ledger. By definition the Applicant’s position is that there is no invoice to support any of the charges listed. The “ledger” figure is the Applicant’s interpretation of the records provided in the ledgers for each year as described above. The “outcome” figure is the sum the Applicant seeks to persuade the Tribunal to determine to be unreasonably incurred, due to there being no evidence to support the fact that it has been incurred.[53]The Respondent’s position is as is set out in the third column of the table, this information being taken from its undated submission from its representative, which followed the Applicant’s submission of 27 February 2025. In this submission, the Respondent argues a number of times that the challenge must be rejected due to “lack of particularity”, with it being argued that the Applicant has not identified where in the ledger the calculations of the “ledger” amounts given by the Applicant come from.[54]Table of challenges to charges due to absence of invoices 2018 Applicant position Respondent position Accountancy fees Accounts £534 Ledger nil Outcome £534 Accounts show accrual for £534 so not on ledger Room hire Accounts £110 Ledger nil Outcome £110 Amounts are on ledger as Room hire £60 (18 Dec) and room hire £50 (22 May) 2019 Car park costs Accounts £490.37 Ledger £400.19 Outcome £90.18£400.19 not on ledger as single figure. Lack of particularity (LOP) General repairs Accounts £10,465.08 Ledger £10,450.08 Outcome £15.00 Not possible to identify ledger expenditure. LOP Landscaping maintenance Accounts £3,075.00 Ledger £2,550.00 Outcome £525.00 Ledger shows £2,550 plus there is £245 on 19 May – total £2,795. Says this is the accounts figure Accountancy Accounts £570.00 Ledger nil Outcome £570 Would not be shown on ledger as is an accrual Management fees Accounts £17,733.04 Ledger £17,253.04 Outcome £480 Relies upon p902 of bundle (for £480) 2020 Car park costs Accounts £192.00 Ledger £165.60 Outcome £26.40 Explained by movements in the nominal coding when accounts drawn as compared to the ledger Communal cleaning Accounts £2,909.80 Ledger £1,936.80 Outcome £973.00 Can’t find the ledger sums. Relies on accounts. Lift repairs Accounts £12,576.50 Ledger £5,474.25 Outcome £7,142.25 Can’t find the ledger sums. Relies on accounts. CCTV Accounts £278.88 Ledger £202.20 Outcome £76.68 Can’t find the ledger sums. Relies on accounts. Accountancy Accounts £600 Ledger £570 Outcome £30 Would not be shown on ledger as is an accrual Lift insurance Accounts £1,245.63 Ledger nil Outcome £1,245.63 Explainable by an accrual on the Respondent’s part Electrical repairs Accounts £1,659 Ledger £60 Outcome £1,599 Can’t find the ledger sums. Relies on accounts. Electricity Accounts £7,036.58 Ledger £5,206.25 Outcome £1,830.33 Applicant not correct re ledger. Should rely on invoices Water charges Accounts £5,251.01 Ledger £3,850.59 Outcome £1,400.42 Likely to be dealt with on an accruals basis Buildings insurance Accounts £26,165.29 Ledger £22,011.04 Outcome £4,154.25 Insurance year not same as service charge year. Ledger sum is greater. Cost calculated proportionately between years 2021 Fire, h&s Accounts £2,200 Ledger £200 Outcome £2,000 Certain adjustments have been made in terms of the coding of Nominals. Morton Baxter cashbook shows £2,000 on health & safety (asbestos survey £200, reinstatement costs assessment £1,800 Fire alarm maint etc Accounts £2,689.00 Ledger £1,653.60 Outcome £1,035.40 Morton Baxter cashbook shows £2,736.60 for fire alarm maint. (para 74) Buildings insurance Accounts £7,745 Ledger £840.28 Outcome £6,904.72 Explained by accruals accounting 2022 Window cleaning Accounts £1,458.00 Ledger nil Outcome £1,458.00 Supported by Morton Baxter cash book entries of £1,547.60[55]The Tribunal is not persuaded that difficulty in working out where the Applicant’s ledger figures come from is a good reason for us to determine that the charge in question is reasonably incurred and therefore payable. If there is no supporting invoice or persuasive other evidence that the charge has been incurred, it would be reasonable to conclude that the Applicant’s task in showing a prima facie basis for challenging a charge included in the Respondent’s accounts is made out.[56]The burden then switches to the Respondent to prove that the charge was in fact properly incurred. What the Respondent could have done, but failed to do in its submission in response, would have been to assist the Tribunal in identifying any inputs into the ledger (or other supporting evidence) that did support the charges being challenged. On a number of occasions, the Respondent argued that “it is not a matter for the Respondent to “guess” at how the Applicant has arrived at his calculations’. We agree that guesswork is not required, but as the ledgers are the Respondent’s documents, it should know how to interpret them correctly so as to support its case. The amounts actually challenged were set out by the Applicant. If there was an answer to that challenge contained in the ledgers or elsewhere, it should have been provided.[57]We were also mindful of the Respondent’s suggestion that any apparent discrepancies between the accounts, the ledgers, and the documentary evidence of invoiced charges, was partly explained by the need for accounts to be prepared on an accruals basis, rather than a cash basis.[58]We agree that adjustments are needed to present accounts on an accruals basis, but when accounts are so adjusted, an accountant would keep a careful record of the adjustments, so that an explanation could be provided if the accounts figures differed from the cash payments evidenced by the invoices, and those records would enable the Respondent to reconcile the cash position (on which basis the Applicant has worked) with the correct, accruals based, accounts. No such analysis was provided by the Respondent.[59]The mischief being discussed in this section is about missing invoices, and whether the Respondent has been able to prove the expenditure has been incurred in the light of the absence of those invoices. Our view is that the argument that it is all to do with accruals and prepayments is generally inadequate to explain missing invoices.[60]The Tribunal’s conclusions on the challenges listed in the table above are as discussed below. As alluded to, our test has been whether the Respondent has been able to show supporting invoices or other persuasive evidence that the accounts figures are correct.[61]2018a. accountancy fees. We are sure that an accountancy fee would have been incurred because accounts for the year were produced. The fee is for a reasonable amount in our experience. We determine it was reasonably incurred.b. room hire. We agree that the 2018 ledger does show a room hire fee of £50.00 on 22 May 2018, but we could not locate a payment of £60.00 in December. We determine that £60.00 in 2018 for room hire was not reasonably incurred.[62]2019a. car park costs. The Tribunal is only able to identify £116.00 of expenditure on car park costs in the ledger. It is to the Respondents advantage that the Applicant has been able to find £400.19 of expenditure. We accept the Applicant’s figures and determine that the Respondent has not succeeded in persuading us that £90.18 of expenditure on car park costs has been reasonably incurred.b. general repairs. The amount challenged is a very small sum as a proportion of the total expenditure on this item. We are not persuaded that the accounts figure must be wrong, and we do not allow this challenge.c. landscaping maintenance. The ledger in fact supports expenditure of £2,795.00, not £2,550.00 as suggested by the Applicant. We allow that sum but cannot find any support for expenditure of £3,075.00. We determine that £280.00 of the accounts expenditure for this category was not reasonably incurred.d. accountancy. As for 2018, we do not accept this challenge as the existence of the accounts is ample evidence that a charge was incurred, and the amount charged is reasonable.e. management fees. There is evidence in the Bundle (at p902) of an invoice for £480.00, which is the amount the Applicant says is not supported. We agree with the Respondent that this sum was reasonably incurred.[63]2020a. car park costs. We do not understand the Respondent’s submission. We agree with the Applicant that there is insufficient evidence that £26.40 of the charge for car park costs of £192.00 was in fact incurred and we determine that sum is not reasonably incurred.b. communal cleaning. Both the ledger and the invoices total £1,936.80 for internal communal cleaning for 2020. We agree with the Applicant that there is no documentary support for a charge of £2,909.80 as set out in the accounts. We determine that the sum of £973.00 is unreasonably incurred.c. lift repairs. In fact, the invoices in the Bundle for this item total £8,976.00 (bundle pages 1052 – 1056). We can find no further support for the accounts expenditure of £12,576.50. We determine that the sum of £3,600.50 (the difference between these two figures) is not reasonably incurred.d. CCTV. We are unable to find any support for the accounts charge of £278.88 for this item either in the disclosed invoices or in the ledger. We determine that this sum was not reasonably incurred.e. accountancy. As for previous years, we have no doubt a charge was incurred and the sum in the accounts is reasonable. We determine it was reasonably incurred.f. Lift insurance. There is nothing in the ledger to support this charge, and there is no invoice for it in the Bundle. We determine that the sum of £1,245.63 for lift insurance was not reasonably incurred, as there is no evidence it was in fact incurred at all.g. electrical repairs. The ledger and the invoices in the Bundle appear only to support expenditure of £60.00 for this item. We determine that the sum of £1,599.00 (the difference between the charge in the accounts and the established actual expenditure) was not reasonably incurred.h. electricity. The Respondent has provided invoices for electricity supplied to the Court in 2020. Frankly, they are in a real mess. There is (as commonly found in service charge disputes) no clear identification of the opening and closing meter readings for the beginning and end of the year. There are large gaps between invoices with a mix of actual and estimated readings and a number of credit notes as well as actual invoices. Respectfully, it is not possible to work out the correct electricity charge for the year. The ledger shows that payments of £5,206.25 have been paid in the year. Taking that payment at face value, we cannot determine that the accounts figure was in fact either paid or payable. We determine that the difference between what the ledger shows was actually paid and the figure in the accounts (i.e. the sum of £1,830.33) was not reasonably incurred.i. water charges. Water supply charges are unavoidable and payable throughout the year. The accounts figure is £5,251.01 but the ledger only records payment of £3,850.59. Curiously, the ledger payments only start in June 2020 and then appear to have been paid around once a month until the end of the year. It appears therefore that some water charge liability for the first part of the year has not been recorded on the ledger, but there is no doubt in our minds that there would have been a liability. We therefore allow the full amount charged in the accounts for this expense. The record keeping may well have gone awry, but on the balance of probabilities we find the liability would have existed as set out in the accounts.j. buildings insurance. The ledger records payment of two insurance invoices in 2020; A payment of £6,859.35 to PI Property Insurance in April, and a payment of £15,360.04 in August to a second insurer. The Bundle contains the insurance schedules and the invoices for both payments (pp529 – 540 and 1089 – 1090). The insurance renewal date is in August in each year. The buildings insurance premiums for 2019 – 2020 were: £16,133.10 (2019), and £15,017.26 (2020). No invoice for buildings insurance in 2021 has been provided, and the ledger for that year only shows £1,375.44, for an extension of cover and for liability cover policies.k. In fact, the first payment in 2020 was payment of a balance due for the 2019 service charge year insurance cost.l. We are not able to accept the Respondent’s explanation that the accounts charge of £26,165.29 for insurance in 2020 arises because it takes account of the prepayments (brought forward and carried forward). The premiums for both the preceding and succeeding year and for 2020 itself were significantly lower than the amount charged in the accounts and so no amount of taking account of accruals and prepayments can increase the sum charged in the accounts above the actual average premium.m. We accept the Applicant’s submission that £4,154.25 was not reasonably incurred on insurance costs for 2020. This means that the insurance cost for 2020 in the accounts is reduced to £22,011.04, though it was clearly partly for 2019 (see sub-para k. above). We have however made a further adjustment to the insurance cost for 2020 in para 64g below due to the need to reconcile what appears to be an overcharge in 2020 and an undercharge in 2021, as explained below. We find that the insurance charge for 2020 should have been £15,698.98, which we find to be a reasonable charge.[64]2021a. fire / health and safety costs. For the 2021 year, the Respondent has been able to find some documentary evidence to support expenditure shown in the accounts, despite the fact that there are no invoices and no nominal ledger entry in the accounting records, by providing extracts from the cash book for the year. Readers will appreciate that the cash book is the other side of the accounts in a double entry bookkeeping system which records, as the double entry, the cash or bank payments entered in the nominal ledgers. The cash book records £2,200.00 as having been paid in 2021 for a fire risk assessment (£200.00), an asbestos survey (£200.00), and a reinstatement costs assessment (£1,800.00). There are therefore records to support the whole of this charge shown in the accounts. The Tribunal finds that this sum was reasonably incurred.b. fire alarm maintenance. In similar vein, there are cash book entries identified by the Respondents representative’s solicitor’s response which support expenditure of £2,689.00 on this item. The Tribunal finds that these costs were reasonably incurred.c. buildings insurance. The Respondent argues that there is an expenditure analysis document, an extract of which is shown in its solicitor’s submission, showing a payment (or at least a liability) of £22,502.80 for buildings insurance. The extract records this as being for a policy from 04/09/2022 to 03/09/23 and then argues that this explains why the insurance cost for 2021 amounts to £7,745.00. That logic is difficult to follow as we are looking for clear evidence that the Respondent incurred insurance costs in the 2021 service charge year, not 2022. The plain fact is that in neither the invoices provided in the Bundle, nor in the 2021 nominal ledgers is there any evidence of the incurring of a cost for buildings insurance in 2021, apart from a premium of £840.28 to extend the insurance year from 12 August to 31 August.d. There is evidence that the insurance cover for 1 January 2021 – 12 August 2021 was prepaid by the payment of the invoice in August 2020 (for the insurance year 12 Aug 2020 – 11 August 2021) of £15,360.04. To that extent, it would be justifiable to include a portion of that sum (which may well be £7,745.00) to be included in the 2021 accounts. The difficulty is that the whole of that payment seems to have been included in the 2020 accounts.e. There is no evidence that a buildings insurance premium was paid in August 2021 for the balance of that insurance year.f. Our determination is that we should make our own assessment of the insurance cost for both 2020 and 2021 in the light of the discussion above. The premium paid in 2019 of £16,133.10 and 2020 of £15,017.26 needs to be apportioned between those years and 2021. Each payment reflects 142 days of insurance for the year of payment and is then a prepayment for the succeeding year of 223 days.g. The buildings insurance cost for 2020 was therefore £9,856.65 (223 days of the annual sum of £16,133.1) + £5,842.33 (142 days of the annual sum of £15,017.26) = £15,698.98. The buildings insurance cost for 2021 was £9,174.92 (223 days of £15,017.26) + £840.28 = £10,015.20.h. Thus, we find that an additional sum of £6,312.06 of the 2020 insurance cost was also not unreasonably incurred. However, the 2021 insurance cost (in the accounts at £7,745.00) is allowed at £10,015.20 (an increase of £2,270.20).[65]2022 The Respondent’s evidence from the Morton Baxter cash book is that the sum of £1,458.00 was in fact incurred. We find that it was reasonably incurred.[66]In summary, our findings are that for 2019 and 2020, the following sums were not reasonably incurred:a. 2018 - £60.00b. 2019 - £370.18c. 2020 - £20,020.05[67]For 2021, we find that all the sums claimed in the accounts were reasonably incurred, and that in addition the sum of £2,270.20 was reasonably incurred for insurance costs.[68]For 2022, we find that all sums set out in the accounts were reasonably incurred. Consultation for major works in 2021/22[69]At the beginning of the oral hearing, Mr Fahy confirmed that the issue the Applicant had with payability for certain major works in 2021/22 was that he did not accept that he had been served with the statutory consultation documents required by the Service Charge (Consultation Requirements) (England) Regulations 2023 (“the Consultation Regulations”). This issue had also been flagged in the Applicant’s Statement of Case.[70]That this issue of service was the issue that concerned the Applicant is also apparent from a review of emails between the parties between July 2022 and February 2023 on pages 228 to 238 of the Bundle.[71]The Applicant says that he never received the statutory notice of intention dated 6 December 2021 relating to proposed major works at the Court to instal a communal fire detection system, replace wooden cladding to the external face of the lift shafts, replace eternal roof coverings above the lift shafts, and recover the main roofs to the blocks, nor the statement of estimates dated 24 January 2022 and 7 February 2022 that followed this document.[72]The Tribunal has been supplied with copies of the above documents addressed to the Applicant at the business address of Blue Property Management UK Ltd.[73]Ms O’Neill’s evidence is that the notices were all served by ordinary first class post in accordance with the standard procedures used by her agency for serving statutory notices. Her claim is that they are deemed served in the ordinary course of post in accordance with section 7 of the Interpretation Act 1978, as they were properly addressed, stamped, and posted. Her witness statement, containing the normal statement of truth, asserts this to be so.[74]The Tribunal has no reason not to accept the sworn evidence of Ms O’Neill on this point and does so.[75]Section 7, however, provides that the presumption of service is rebuttable (unless the contrary is proved). Whilst there have been assertions made on behalf of the Applicant that he did not receive the notices, the Tribunal could only accept that the notices were not received on the basis of hearing evidence on the point. This would have necessitated at least a witness statement (with statement of truth) from the Applicant, or, even better, his attendance at the hearing to give oral evidence and submit himself to cross-examination. Neither occurred. We therefore have no evidence before us to counter the presumption of service.[76]The Tribunal has no option, having accepted Ms O’Neill’s evidence, other than to find that the statutory consultation notices were indeed served correctly. Thus, there is no basis upon which the Tribunal can determine that the invoices for the Applicant’s share of the costs of the works carried out are not payable.[77]In his closing submissions, Mr Fahy presented a new argument, to the effect that the notice of estimates was defective as it did not provide quotations from at least two contractors, contrary to paragraph 11(5)(b)(i) of the Consultation Regulations. This point was not referred to in any of the pre-application correspondence supplied to the Tribunal, the Applicant’s statement of case, or any of the subsequent written submission received prior to the closing submissions. It was thus made far too late to be considered. The Tribunal is not able to determine this point. Section 21B compliance[78]In his statement of case, the Applicant raised the issue of whether service charge demands served on him complied with section 21B of the Act – i.e. whether they were accompanied by a summary of leaseholder’s rights and obligations.[79]At the hearing, Mr Fahy expanded on this issue by querying whether the summaries provided were at the correct font size, i.e. being a font size of at least 10pt as required by paragraph 3 of the Service Charges (Summary of Rights and Obligations, and Transitional Provision) (England) Regulations 2007.[80]The Respondent argued the summaries supplied should be held to be in compliance with the Regulation, but as a precautionary measure, the Respondent’s solicitor re-served all demands upon the Applicant on 3 March 2025. She argued that section 21B was suspensory only in its effect, so if it were the case that the demands were non-compliant, that defect had been resolved by re-service.[81]The Tribunal agrees in principle with the Respondent’s argument (see Tedla v Cameret Court Residents Association Ltd [2015] UKUT 221 (LC), Johnson v County Bideford Ltd [2012]UKUT 457 (LC), Skelton v DBS Homes (Kings Hill) Ltd [2017] EWCA Civ 1139).[82]We therefore decline to determine whether demands served prior to 3 March 2025 were compliant with the Regulation as:a. Evidentially, it was not possible at the hearing to measure the font size of the demands. The hearing documents were all electronic, and could thus easily be increased or decreased in font size; andb. It would be pointless anyway because of the re-service of the demands. Costs[83]The Applicant has applied for orders under section 20C of the Act and Paragraph 5A of Schedule 11 to the Commonhold and Leasehold Reform Act 2002 limiting the ability of the Respondent to either include its costs of these proceedings within the service charge, or to demand that the Applicant pay them as an administration charge.[84]The Tribunal agrees with the Respondent’s suggestion that these applications should be determined once the parties know the outcome of the section 27A application.[85]We therefore direct that the parties should provide written submissions on these applications within 21 days of the date of this decision. The Tribunal will consider the applications without an oral hearing and on the basis of the papers already available and the new submissions provided and inform the parties of its determination thereafter. Appeal[86]Any appeal against this decision must be made to the Upper Tribunal (Lands Chamber). Prior to making such an appeal the party appealing must apply, in writing, to this Tribunal for permission to appeal within 28 days of the date of issue of this decision (or, if applicable, within 28 days of any decision on a review or application to set aside) identifying the decision to which the appeal relates, stating the grounds on which that party intends to rely in the appeal, and stating the result sought by the party making the application. Judge C Goodall First-tier Tribunal (Property Chamber)